Bank Tech: Mobile and P2P Payments

What is a Mobile Payment?

Mobile payments is a new payment method that utilizes a cellphone or smartphone to make a payment, instead of cash, credit cards  or debit cards. Banks in the U.S. are starting to roll out the service, after mobile payments has seen huge growth  in Asia and Europe. If you pay for a good or service with a phone, they can lower their transaction costs and make a payment while on the fly.  There are four primary ways you can make a mobile payment:

1. Mobile billing - You can pay a bill and have it charged to your mobile service plan with mobile billing. Advantages for consumers of mobile billing include simplicity and speed.

2. Mobile payments via WAP - Paying a bill through a WAP mobile payment service is a one-click answer to buying content or software on your mobile device. If you bought a ringtone, wallpaper or game on your phone, you have probably already been introduced to the ease of WAP billing.

3. Near Field Communication (NFC) - This technology involved using a scan code that enables your phone to transmit data to make a payment. Think of your phone as a credit card that you swipe, except the technology will allow you to point-and-shoot. Someday you may pay for everyday services like parking and takeout food with a NFC-enabled phone.

4. Online and mobile wallets - An application or program that stores your various account log-ins and passwords in order to expedite payments is a virtual form of a wallet. There are already websites and software available to help simplify payments in this manner. The latest evolution for the idea of a virtual wallet is to use mobile phone device as a wallet. Payments can be made by SMS text messaging, email or through a mobile banking application. Look for more banks to start offering mobile payments solutions in 2011.

What is a P2P Payment?

P2P payments are an innovative trend in electronic payments. The idea that you can pay for a bill or service with a person-to-person money transfer is nothing new. Think of how you pay your babysitter or the person who mows your lawn. What is new about P2P payments is that banks are going to begin to offer this service as part of your checking account.  Using email, text or a money transfer from an online banking platform or mobile banking service will allow you to conveniently and securely make a quick payment to anyone you want. This technology could be a real game changer.

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